Thursday, December 19, 2013

Your partnership with Loeb has made our contribution to the Red Cross possible!

Happy Holidays and Happy New Year!

Your partnership with Loeb has made our contribution to the Red Cross possible!

During this Holiday season we wanted to take a moment and express our appreciation.

In today's world you can't be successful without others and we wanted to take this time to thank you for your support of us and we hope that you feel we have been equally as supportive to you.

For the last 5 years instead of giving out small trinkets as a sign of our appreciation, we have been making donations to worthy causes to help make our world a better place.

This November, a massive storm system swept through the Midwest, leaving widespread destruction in its wake. Hundreds of thousands were affected by these storms including friends and family of Loeb employees.

We wanted to help with the ongoing support of Southern Illinois this holiday season as they continue to recover and rebuild. By donating to the Red Cross, we are mobilizing relief workers and helping to stock shelters with greatly needed food and supplies.

We are grateful to you, our customers and partners, for your continued business and we hope you appreciate being a part of our support of the Red Cross and their efforts to bring assistance to those deeply affected by the storm.

We Wish You a Wonderful Holiday Season
& a Happy New Year!

Wednesday, February 6, 2013

Net Values & What This Really Means to Lenders

I your net recovery by understanding the true costs involved in liquidating or auctioning a credit.

Many focus on gross appraisal values but now need to pay more attention to the rising unrecoverable costs of liquidating a facility. Net values have become more main stream as more lenders focus on the final results.

Loeb now asks every facility appraised for a variety of facility costs on a 1-month basis. We ask for such things as:

  • Rent/mortgage payment and Real Estate Taxes
  • Security
  • Utilities & Maintenance
  • Insurance
  • Any other recurring miscellaneous expenses, such as waste water permits or costs associated with purging the product from the system

*Assumed three (3) months FLV and six (6) months OLV

Looking at our database we have normalized the average utilities at 10% of costs under production for an idle facility. In calculating Net FLV we assume 3 months of expenses and 6 months of expenses for Net OLV. Furthermore, given our auction expertise, we additionally estimate marketing, setup and selling expenses.

Below is an example from an actual appraisal recently performed where the Net OLV is less than the Net FLV. This is not uncommon though surprising to lenders that are not underwriting or credit focused.

In the real world, a major facility (such as the example above), would generally liquidate in one of two manners:

  • Sold as turnkey, and thus most likely achieving a value over OLV
  • The facility would be shuttered and prepared to sell at auction. (It is less common in the real world for a net OLV scenario to play itself out)

Quantifying your exit strategy and understanding the financial impact of your lending practices is crucial when lending on hard assets. Loeb Appraisal is focused on providing clear concise data so that more informed credit decisions are made.

Learn More About Loeb Appraisal